With Brexit on the horizon, many property owners are considering remortgaging to a fixed-rate deal to safeguard themselves from market fluctuations. Following this trend, Yorkshire Building Society has launched a five-year fixed interest rate mortgage for homeowners with 15% equity in their home at a market-leading rate of 2.01%.
The lender says it's launched the competitive deal in reaction to borrower demand for long-term fixed-rate products, which it believes is down to the continuing uncertainty brought on by Brexit.
The building society reports it saw a 44% increase in borrowers looking for a five-year fixed-rate deal in 2022 when compared to same month in the previous year. But exactly how will the Yorkshire offer compare – and it is it a good idea to commit yourself to a five-year deal?
Which? takes a closer look at Yorkshire’s deal and the pros and cons of fixing for 5 years versus a shorter two-year period.
What's the deal?
Yorkshire's new deal allows homeowners with 15% equity to remortgage for a price of 2.01%, fixed until 30 June 2024 – the total cost for comparison is 3.6% APRC.
The five-year deal may be the lowest rate on an 85% loan-to-value (LTV) but it comes with a hefty lb1,995 completion fee.
The deal also includes early repayment charges which are tiered across the full term. What this means is if you want to pay back your mortgage before the end from the five-year period it'll cost you 5% of the remaining balance in the first year, 4% in the second, 3% within the third, 2.5% in the fourth and 1.5% within the fifth.
However, the mortgage is portable, which means you might be able to ensure that it stays should you move house.
Is a long-term fixed-rate the right option for you?
A five-year fixed-rate deal offers borrowers peace of mind their interest will remain exactly the same each month, regardless of what occur in the wider economy.
However, this security comes confined. Currently, the typical five-year fixed-rate remortgage deal is 3.25%, when compared with 2.86% on two-year deals – a positive change of 0.39%.
On a lb250,000 25-year mortgage, this is the difference between lb1,218 a month or lb1,168 a month – which comes down to lb600 annually in extra bills.
You also needs to factor-in the first repayment charges (ERCs) on long-term fixed rates deals, which may apply if you wish to sell up and move.
For example, one year after getting a lb250,000 mortgage in a 2.01% rate, you would come with an outstanding debt of lb242,225.
If you had been in a position to pay it back, and the provider charged a 4% ERC, you would need to hand over an eye-watering lb9,689 just for repaying your mortgage sooner than planned.
You may be able to avoid ERCs in case your deal is portable, as your lender may permit you to transfer the mortgage from one property to a different one.
A longer-term fix can also save you money around the cost of remortgaging every few years. With a two-year deal, you'd need to pay another round of valuation and completion fees (which can run into the thousands) at least two times over five years, which you could avoid having a five-year term.
Best two-year and five-year remortgage deals
If you are looking to remortgage and fancy locking into a five-year fixed interest rate, listed here are the very best deals across a variety of LTVs.
| Lender | Term | Initial rate | Revert rate (SVR) | APRC | Fees | LTV |
| Coventry Building Society* | Fixed to 30/06/2024 | 1.99% | 4.74% | 3.8% | lb999 | 50% |
| HSBC | Fixed to 31/07/2024 | 1.81% | 4.19% | 3.4% | lb1499 | 60% |
| Principality Building Society** | Fixed to 31/03/2024 | 1.90% | 5.05% | 3.9% | lb1395 | 65% |
| HSBC | Fixed to 31/07/2024 | 1.91% | 4.19% | 3.4% | lb1499 | 70% |
| Yorkshire Building Society*** | Fixed to 30/06/2024 | 1.94% | 4.99% | 3.6% | lb1495 | 75% |
| TSB**** | Fixed to 31/05/2024 | 2.04% | 4.24% | 3.3% | lb995 | 80% |
| Yorkshire Building Society | Fixed to 30/06/2024 | 2.01% | 4.99% | 3.6% | lb1995 | 85% |
| Skipton Building Society | Fixed to 31/07/2024 | 2.29% | 4.99% | 4.2% | lb1995 | 90% |
*Great Britain
**Wales and England
***Free valuation and lb750 cashback
***lb150 cashback if you are a TSB customer
Source: Moneyfacts 14 March 2022
Alternatively, if you'd prefer a less expensive monthly outlay, you may be better off taking a two-year fixed-rate. We've put down the lowest two-year fixed-rate remortgage deals below across a range of LTVs.
| Lender | Term | Initial rate | Revert rate (SVR) | APRC | Fees | LTV |
| Coventry Building Society* | Fixed to 30/06/2022 | 1.55% | 4.99% to 30/06/2024 4.74% thereafter | 4.3% | lb999 | 50% |
| Lloyds Bank | Fixed to 31/05/2022 | 1.43% | 4.24% | 3.8% | lb999 | 60% |
| Chelsea Building Society | Fixed to 31/08/2022 | 1.55% | 4.25% | 4.2% | lb1295 | 65% |
| HSBC | Fixed to 31/07/2022 | 1.50% | 4.19% | 3.9% | lb1499 | 70% |
| Yorkshire Building Society | Fixed to 30/06/2022 | 1.47% | 4.25% | 4.1% | lb1495 | 75% |
| Sainsbury's Bank | Fixed to 30/06/2022 | 1.62% | 4.49% | 4.1% | lb995 | 80% |
| Leeds Building Society | Fixed to 31/05/2022 | 1.67% | 4.69% to 31/05/2024 5.69% thereafter | 4.9% | lb1999 | 85% |
| Barclays | Fixed to 30/04/2022 | 1.79% | 4.24% | 3.9% | lb999 | 90% |
*Great Britain
**Wales and England
Source: Moneyfacts 14 March 2022
